BancNet, PCHC merger pushed

MANILA, Philippines — Major groups are supporting the planned merger between BancNet Inc. and the Philippine Clearing House Corp. (PCHC) to undergo substantial changes in response to recent developments in the business, regulatory and technological environments surrounding the payments industry.

The merger was proposed by the Bankers Association of the Philippines (BAP) and has been endorsed by the Philippine Payments Management Inc. (PPMI) to the Bangko Sentral ng Pilipinas (BSP) for approval.

A majority or 88.7 percent of the shareholders of BancNet approved the proposed merger, while 78.6 percent of the owners of PCHC are in favor of the consolidation.

BancNet and PCHC are the clearing switch operators for InstaPay and PESONet.

Aside from the BSP approval, the proposed merger is awaiting the green light from the Securities and Exchange Commission (SEC) as well as the Philippine Competition Commission (PCC).

In a statement, BancNet said the proposed merger with PCHC would create a stronger, more resilient organization that would be better able to provide safe, reliable and efficient payment services for the benefit of consumers.

“This will be achieved through the consolidation of their financial, technology, talent and other resources,” it said.

According to BancNet, the merged entity would also be better able to comply with the new, more stringent regulatory requirements arising from the passage of Republic Act 11127 or the National Payment Systems Act as well as various circulars issued by the BSP.

“The merged entity will result in better governance as required under the new regulatory regime, achieve cost efficiencies arising out of the pooling of technology, risk management and other resources, and achieve a sharper strategic focus on the development of the payments industry,” BancNet added.

Furthermore, it said the consolidation of technology resources, expertise and budgets would enable the merged entity to develop and implement a sound risk management plan.

These include ensuring a secure and resilient data center and back-ups and addressing cybersecurity risks.

Both parties also clarified that the merged entity, like BancNet at present, would operate like a utility for the payments industry.

“As such, it shall price its services to consider the costs of providing the service plus a reasonable margin to fund future investments in technology and processes necessary to maintain and improve the service,” it said.

It added that the consolidation would help ensure that costs remain in check and that pricing of payment services is transparent, fair and equitable to all key stakeholders.

Under its Digital Payments Transformation Roadmap, the BSP aims to shift 50 percent of total retail transactions to electronic channels and increase the number of banked Filipino adults to 70 percent by the end of this year.

With the COVID-19 pandemic serving as catalyst, the share of digital payments increased further to 42.1 percent in 2022 from 30.3 percent in 2021, while the number of Filipino adults with formal accounts almost doubled to 56 percent in 2021 from 29 percent in 2019.